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5 Technology Stocks Powering S&P 500 ETF to Record Highs

After a weak start to 2024, the S&P 500 has staged a nice comeback, touching new record highs lately. In fact, the benchmark logged the fourth consecutive week of gains. SPDR S&P 500 ETF Trust SPY, the proxy version of the S&P 500 Index, has risen nearly 3% over the past month (read: ETFs in Focus as S&P 500 Confirms Bull Market: How Long Will It Last?).

The rally was driven by strong corporate earnings, AI developments and renewed confidence in the tech sector. As such, we have highlighted five stocks that have gained in double-digits in the past month, and have a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold). These are Meta Platforms META, Nvidia NVDA, Advanced Micro Devices AMD, Juniper Networks, Inc. JNPR and Palo Alto Networks, Inc. PANW.

Total Q4 earnings of the 176 S&P 500 members that have reported results rose 1.7% from the same period last year on 2.6% higher revenues, with 81.8% beating EPS estimates and 69.3% beating revenue estimates. Earnings growth is tracking above the last reported quarter, while revenue growth is below the same period. EPS and revenue beat percentages are roughly in-line with the recent and historical periods.

In particular, strong earnings of mega-cap companies — Microsoft (MSFT), Meta Platforms (META) and Amazon (AMZN) — reconfirm their leadership position in the market, bolstering investors’ sentiment (read: Meta Soars on Solid Q4 Earnings, First Dividend: ETFs to Buy).

Last month, the U.S. government announced the launch of a pilot program for AI research in collaboration with major tech companies and federal agencies under the umbrella of the National Science Foundation. This move has contributed to the positive sentiment of the tech sector.

Additionally, the bouts of data indicate a resilient economy, leading to risk-on trade. However, it scaled back the expectations for rate cuts anytime soon. Inflation is easing and the economy is improving. The personal consumption expenditure index — the Federal Reserve's preferred inflation gauge — rose 2.6% in December. This marks the third time that inflation is below 3%. Meanwhile, the economy grew at a much more rapid pace than expected, with GDP rising at a 3.3% annualized rate in the fourth quarter of 2023, up from the Wall Street consensus estimate growth rate of 2%.

The labor market has also shown persistent strength as job growth accelerated in January and wages increased by the most in nearly two years. The economy added 353,000 jobs in January and the unemployment rate was unchanged at 3.7%.

Let’s take a closer look at the fundamentals of SPY.

SPY in Focus

SPDR S&P 500 ETF Trust holds 503 stocks in its basket, with each accounting for no more than 7.3% of the assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, financials, healthcare and consumer discretionary accounting for a double-digit allocation each. SPDR S&P 500 ETF Trust has an AUM of $485.5 billion and charges 9 bps in fees per year. It trades in average daily volume of 66 million shares and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see: all the Large Cap Blend ETFs here).

Below we have highlighted the abovementioned five best-performing stocks in the ETF.

Best-Performing Stocks of SPY

Meta Platforms is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like the photo and video sharing app Instagram and WhatsApp messaging app due to acquisitions. The stock jumped 35% in a month and has an estimated earnings growth of 19.2% for this year.

Meta Platforms makes up for 2.1% of the assets in SPY and currently has a Zacks Rank #2 (Buy). It has a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nvidia is the worldwide leader in visual computing technologies and the inventor of graphic processing unit or GPU. The stock has jumped 220% this year. It has an estimated growth of 268.3% for the fiscal year ending January 2024.

Nvidia makes up for 3.8% of the assets in SPY and has a Zacks Rank #2 at present. It has a Growth Score of A.

Advanced Micro Devices has strengthened its position in the semiconductor market on the back of its evolution as an enterprise-focus company from a pure-bred consumer-PC chip provider. The stock has rallied 28.2% over the past month and makes up for 0.7% in the SPY portfolio.

Advanced Micro Devices has an estimated earnings growth rate of 36.9% for this year and has a Zacks Rank #3 (Hold) (read: Tech Leads S&P 500 to Highs: Does Further Rally Await ETFs?).

Juniper Networks is a leading provider of networking solutions and communication devices. The company develops, designs, and sells products that help to build network infrastructure used for services and applications based on a single Internet protocol network worldwide. The stock has gained 23.5% and accounts for a 0.03% share in the SPY portfolio.

Juniper Networks has an estimated earnings growth rate of 3.1% for this year and has a Zacks Rank #2 at present.

Palo Alto Networks offers network security solutions to enterprises, service providers and government entities worldwide. The stock has gained about 22% over the past month and makes up for 0.25% of the SPY portfolio.

Palo Alto Networks has an estimated earnings growth rate of 23.6% for the fiscal year ending July 2024 and a Zacks Rank #3. It has a solid Growth Score of A.

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Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report

Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

SPDR S&P 500 ETF (SPY): ETF Research Reports

Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report

Meta Platforms, Inc. (META) : Free Stock Analysis Report

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